1. Medicaid 101 Jul y 8, 2013 Presented by Senate Staff: Adriane Crouse Marga Hoelscher Adam Koenigsfeld Interim Committee on Medicaid Transformation and Reform 1

2. Presentation Highlights Background and Overview Missouri Medicaid Services and Service Delivery Systems Provider Reimbursement Levels Financing and Budget Hospital Reimbursement Provider Tax ACA and Federal Health Reform Transformation Considerations 2

3. Background and Overview 3

4. What is Medicaid?  Nation’s largest public health program for low-income Americans  Medicaid is NOT Medicare  Two separate programs with different federal rules and regulations  Different eligibility focus  Children  Pregnant Women  Majority of Spending goes to Elderly and Disabled  Long-Term Services and Supports  Nursing Homes  Home and Community -based Services 4

5. What is Medicaid? Medicaid is Considered an Entitlement Anyone meeting income and eligibility requirements can enroll Jointly Financed by State and Federal governments Federal law requires states offer a basic set of benefits Federal law requires certain groups of people to be covered Medicaid programs differ greatly from state to state 5

6. Federal and State Agreements Medicaid State Plan Agreement between federal government and each state Documents specifics regarding each state’s program Covers specifics like: services, eligibility, provider reimbursement and cost sharing Waivers Necessary to innovate Very difficult process Medicaid Partnership Plan Specific to Missouri Documents Provider Tax Requirements Requires Missouri to submit Additional Documentation 6

7. Missouri Medicaid 7

8. Missouri Caseload as of May, 2013  532,100Children  27,240 Pregnant Women  77,289 Low Income Parents  161,491 Persons with Disabilities  75,346 Low Income Elderly *Additional 59,512 women receive limited services under Breast and Cervical program. Total 873,466 8

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10. In Missouri: DSS is Single State Agency Designation required in federal law Agency responsible for administering Medicaid State Plan MO HealthNet is state’s Medicaid agency Medicaid services also administered by Department of Mental Health Department of Health and Senior Services Department of Elementary and Secondary Education 10

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13. TOTAL MEDICAID ALL AGENCIES FY 2014 Proposed GRFEDOTHERTOTAL Elementary and Secondary Education $0$1,000,000$7,000,000$8,000,000 Mental Health $356,799,977$726,941,916$32,385,406$1,116,127,299 Health and Senior Services $234,605,038$450,951,832$485,831$686,042,701 Social Services $1,194,009,324$3,563,640,541$2,407,772,614$7,165,422,479 Total $1,785,414,339$4,742,534,289$2,447,643,851$8,975,592,479 13

14. State Agencies & Medicaid DSS/MHD Services Other than DMH, DHSS, and DESE Federal Cash Management Maintains MMIS and Clinical tools Maintains State Plan Reviews and Submits All Waivers Develops care strategies DMH Mental Health Services (CPS) Services for Disabled (DD) Alcohol and Drug Services (ADA) Operates Waivers Care strategies for populations they serve DESE State Operated schools First Steps DHSS Home and Community Based Services for Seniors Home Delivered Meals 14

15. Quick Facts Medicaid Management Information System - state mechanized claims processing and information retrieval systems 99.8 million claims processed in FY 12 Payments in excess of $8 billion Average claim processing time is less than a day Over 99% of claims submitted electronically Over 41,000 providers of 68 different types System applies 1000s of edits 15

16. Quick Facts Pharmacy is an Optional Service available to all participants 315,000 average monthly pharmacy users 13.2 million claims $1.16 billion budgeted for FY 14 Is carved out of managed care contracts Nursing Facilities is a Mandatory service for Medicaid programs 23,387 average monthly users in FY 12 8.3 million days provided Average per diem rate in FY 12 was $138.37 Over 60% of occupied beds are paid by Medicaid 16

17. Provider Rates 208.152 RSMo requires an annual parity study Overall rate for SFY 2013 is 57% of Medicare Program2013 Rate as % of Medicare Ambulance40% Audiology45% Dental37% (UCR) Durable Medicaid Equipment86% Optical40% Physician59% Rehabilitation Center Therapy20% 17

18. Clinical Management Examples Inpatient Pre-certification Pharmacy o Clinical Edits o Early Refill, o Dose Optimization Optical DME Prior Authorizations Psychology Prior Authorizations Imaging Prior Authorizations HCBS Assessments and Prior Authorizations Psychology Prior Authorizations Imaging Prior Authorizations HCBS Assessments and Prior Authorizations 18

19. Eligibility 19

20. Source: Department of Social Services 20

21. 2013 ANNUAL INCOME RATES Percent of Federal Poverty Level Family Size 18% Annual Amount 85% Annual Amount 100% Annual Amount 138% Annual Amount * 185% Annual Amount 300% Annual Amount 1$2,068$9,767$11,490$14,856$21,257$34,470 2$2,792$13,184$15,510$20,123$28,694$46,530 3$3,515$16,601$19,530$25,390$36,131$58,590 4$4,239$20,018$23,550$30,657$43,568$70,650 5$4,963$23,435$27,570$35,923$51,005$82,710 6$5,686$26,852$31,590$43,594$58,442$94,770 21

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23. MO HealthNet Enrollees and Expenditures In SFY-2012, seniors and persons with disabilities comprised more than 27% of enrollees, however, they accounted for nearly 66% of MO HealthNet expenditures. Number of People SFY-2012 (Average Monthly) Persons With Disabilities167,367 Seniors77,460 Pregnant Women & Custodial Parents 108,325 Children540,824 Total893,976 *Data reflects Department of Social Services, Table 23, Medical Statistics excluding Women’s Health Services Persons with Disabilities include Permanently and Totally Disabled; Aid to the Blind; Blind Pension; Specified Low-Income Medicare Beneficiary; and, Ticket to Work Health Assurance Program (TWHAP) Seniors include Old Age Assistance; Qualified Medicare Beneficiary (QMB) and, Specified Low-Income Medicare Beneficiaries (SLMB) Pregnant Women & Custodial Parents include MO HealthNet for Families-Adult; Refugee; Women with Breast or Cervical Cancer; Independent Foster Care Children Ages 18-21; MO HealthNet for Pregnant Women (Poverty and Income); and, Presumptive Eligibility (Pregnant Women) Children includes MO HealthNet for Children; SCHIP (including no cost and premium enrollees); MO HealthNet for Families-Child; Foster Care; Child Welfare Services; Title XIX-Homeless, Dependent, Neglected (HDN); DYS-General Revenue; Children in a Vendor Institution; Missouri Children with Developmental Disabilities (MOCDD); Presumptive Eligibility for Children; and, Voluntary Placements

24. Services and Service Delivery 24

25. Services Mandatory Physician, Nurse Practitioner, and Nurse Midwife Services Hospital Services–Inpatient and Outpatient Laboratory and Radiology Services Family Planning Services and Supplies Nonemergency Medical Transportation (NEMT) Federally-qualified Health Centers and Rural Health Clinics Comprehensive Access to Services for Children (EPSDT) Optional Prescription Drugs Eyeglasses, Prosthetic Devices Case Management Services for Specific Conditions 25

26. Service Delivery Fee for Service Seniors Persons with Disabilities Children and Parents outside Managed Care Counties Managed Care Children and Parents inside Managed Care Counties $1.18 Billion budgeted for FY 12 State at Risk for Service Costs Managed Care Plans are at Risk for Costs of Services 26

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28. Costs and Financing 28

29. Jointly Financed FMAP—Federal Medical Assistance Percentage Regular FMAP: Generally based on per capita income Statutory floor of 50% Missouri’s regular match rate is 62% Enhanced FMAPs CHIP is 73% Promotion of Other Federal Priorities 100% FMAP for Electronic Health Records (EHR) 90% MMIS/Technology 75% Program Integrity Administrative Match generally 50% 29

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31. Provider Taxes Defined in federal statute Must be broad-based and uniform Providers cannot be “held harmless” from the tax Safe harbor rate of 6% of net patient revenue Nearly all states have at least one provider tax Most popular: Nursing home Hospital ICF-ID 31

32. Provider Taxes Key in Missouri Missouri has long standing history of provider taxes Missouri relies heavily on provider taxes to fund the Medicaid program Provider taxes fund state match for billions in payments Transformation recommendations must consider impact on provider taxes 32

33. Hospital Reimbursement 33

34. Hospital Reimbursement  Complicated Methodology  Per Diem Based on 1995 Costs Trended to 2001  Medicaid Add-On Payments Makes up Difference Between old Costs and Today’s Cost Paid for both Fee for Service and Managed Care Days Upper Payment Level (UPL)  Disproportionate Share Hospital (DSH)  Outpatient  Provider Tax funds about ½ of State Share of Payments 34

35. FY 12 Inpatient and Outpatient Units of Service by Large Eligibility Groups InpatientOutpatientTotal Units% of TotalUnits% of TotalUnits% of Total Total Custodial Parents21,4823.21%1,313,8449.57%1,335,3269.27% Total Children174,20826.04%1,656,13012.06%1,830,33812.71% Total Disabled413,79561.87%8,370,64860.96%8,784,44361.01% Total Elderly22,7873.41%1,730,77712.61%1,753,56412.18% Total Pregnant Women36,6095.47%658,5094.80%695,1184.83% Grand Total668,881100.00%13,729,908100.00%14,398,789100.00% Source: Table 23 Medical Statistics for FY 12 35

36. Disproportionate Share Payments (DSH) DSH Payments are for Uncompensated Care  Subject to Federal Allotment Cap; and  Subject to Hospital Specific Costs Federal Allotment Reduction under ACA  5% for first three years  15% for next year  50% thereafter Missouri’s FY 2013 DSH payments:  $511 million hospitals  $207 million DMH hospitals 36

37. Disproportionate Share Payments (DSH) DSH Reductions written in the Federal Bill Secretary Determines Cut Formula based on: -Percentage of uninsured, -State’s use of DSH funds, and -State’s current DSH level  Federal Rule with Formula Issued in May 37

38. Why Increasing Medicaid Eligibility is Important to Missouri Hospitals? DSH Reductions Will Happen  Both Medicare and Medicaid Many hospitals at Hospital Specific DSH Caps  Unrelated to ACA Medicare DSH cuts Comparable to Medicaid Other Medicare Payments Impacted Trend Sequestration 38

39. ACA and Federal Health Reform 39

40. Allows Increase of Eligibility Under 65 with incomes up to 138% of the FPL Significant Eligibility Change for Missouri Now: Parents up to 19% of the Federal Poverty Level (FPL) No non-custodial adults unless seniors or disabled Allows Medically Frail 100% federally funded for first three fiscal years (FY14-FY16). State share phases up to 10%: - January 2017 – 5% (half year for FY 2017); - January 2018 – 6%; - January 2019 – 7%; and - January 2020 – 10% 40

41. 41 MEDICAID PROJECTIONS NUMBER OF PEOPLE 259,499 268,039 276,579 292,061 307,542 Source: Budget & Planning

42. Transformation Considerations 42

43. Transformation Considerations Access Quality Sustainable Financing Service Delivery Personal Responsibility Provider Reimbursement Levels Eligibility Levels Appropriateness of Current Levels Organization Structure to Support Transformation 43